Posts Tagged ‘pension’

The Milwaukee County Board’s finance committee on Thursday decided against reducing future pension overpayments amounting to an estimated $10.3 million to 217 current and future retirees.

The committee instead unanimously recommended approval of a Pension Board proposal to retroactively change county ordinances that would result in keeping the improperly high payments flowing to the group. The vote was 8-0 to adopt the Pension Board’s proposal.

This month, Abele stepped back from his April plans to recover as much as $26 million in past overpayments and interest and offered what he described as a compromise. The recovery effort was approved by the County Board in 2007 but never implemented.

Abstract: Policymakers at every level of government are confronting the cost of fringe benefits for public-sector workers. The difficulty of placing an economic value on public employees’ pensions, however, means that policymakers rarely know whether benefits are excessive, especially as interest groups take advantage of the confusion by advancing misleading arguments. This paper discusses how to properly calculate the cost of public defined-benefit pension benefits, compares the cost of these benefits to private-sector retirement plans, and refutes two of the most common arguments that public pension benefits are somehow modest.

The generosity of public-sector pension benefits has come under increased scrutiny in recent years, as states and local governments search for ways to close their budget deficits. The intense battles over public-sector collective bargaining in Wisconsin and Ohio, for example, have been seen as conflicts over whether to reduce public-pension benefits for future retirees. Whether pension cutbacks are justified, however, depends crucially on whether existing benefits are excessively generous compared to those in the private sector. More broadly, policymakers cannot know if total compensation in the public sector—including salaries, benefits, and job security—is at an appropriate market level without a proper understanding of pension costs.

While the world was glued to the developments in the Mediterranean in the past week, Poland took a page straight out of Rahm Emanuel’s playbook and in order to not let a crisis go to waste, announced quietly that it would transfer to the state - i.e., confiscate - the bulk of assets owned by the country’s private pension funds (many of them owned by such foreign firms as PIMCO parent Allianz, AXA, Generali, ING and Aviva), without offering any compensation. In effect, the state just nationalized roughly half of the private sector pension fund assets, although it had a more politically correct name for it: pension overhaul.

By way of background, Poland has a hybrid pension system: as Reuters explains, mandatory contributions are made into both the state pension vehicle, known as ZUS, and the private funds, which are collectively known by the Polish acronym OFE. Bonds make up roughly half the private funds’ portfolios, with the rest company stocks.

And while a change to state-pension funds was long awaited - an overhaul if you will - nobody expected that this would entail a literal pillage of private sector assets.

Detroit native calls Motown’s economic and social ills a warning for the nation.

My ancestors helped build Detroit. The Fourniers were fur-trappers and farmers living hard by the Detroit River until the fledgling auto industry beckoned in the early 1900s with a better deal: $5 a day and a pension.

In the 1960s, my father opted out of the family business to be a police officer. He served Detroit for 25 years as part of the elite motorcycle unit that doubled as the riot squad. One of my earlier memories is of my parents, dressed in church clothes, leaving our house to attend the 1967 funeral of a riot cop.

Mom and dad raised four children at 15285 Coram in the city’s northeast corner, the same block upon which they were raised. All this to say: I love my hometown. And I hate what Detroit’s demise might bode for our country.